Lemon-aid author says Ford’s rescue plan ‘too little, too late’

Ford Motor Company is bleeding red ink and embarking on a desperate plan to convert their truck plants and import six, smaller European vehicles. But Lemon-Aid author and self-professed car curmudgeon Phil Edmonston says “it may be too little, too late.”

“Plant conversions will burn through more billions and new products won’t likely be introduced until late 2009,” says Edmonston. “Furthermore, each time American carmakers have imported their European small cars into North America, the vehicles have been unreliable, poorly serviced, and sales disasters. Think of the Ford Cortina and GM Firenza as two notorious examples of fuel-frugal vehicles rushed onto the Canadian market during the last fuel crisis in the 70s.”

In yet another massive blow to a North American automaker, Ford announced the worst loss in its history this week, a staggering $8.7 billion hit in the second quarter. Ford blamed the downtown on high gasoline prices driving consumers away from its big SUVs and trucks. But as I’ve written here before, the writing has been on the wall for a long time and Ford’s glacial attempts to address the changing market is largely responsible for the mess it finds itself in.

For far too long, Ford, GM and Chrysler have been mesmerized by the fat profits they were making from large trucks. According to Edmonston, a $10,000 profit was normal on these monster trucks, while economy cars brought in perhaps a 10th of that. But that hasn’t stopped companies like Toyota and Honda from reaping large rewards from smaller vehicles and they are not facing the same struggles now.

Edmonston says he believes Ford can turn things around but he believes the company’s rescue plan should include the following:

1. Expand co-ventures with Asian and European automakers like Mazda who know how to make profitable and reliable small vehicles. Ford has successfully done this on a small scale with the Ford/Mazda Escape/Tribute small SUV and the Escort economy car.

2. Sell money-losing Volvo.

3. Cut retail prices by 15 percent and make sure Canadian prices are no higher than American prices.

4. Drop the estimated average $1,500 Transportation Fee on new purchases.

5. Extend the base warranty on all vehicles to 10 years/160,000 km.

We’ll have to wait and see if Ford takes any of Edmonston’s advice to heart.